"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput

Trader Dan's Work is NOW AVAILABLE AT WWW.TRADERDAN.NET

Saturday, March 17, 2012

UP and UP she goes - where she stops nobody knows

I am becoming more and more convinced that the US Monetary Authorities have engaged in a process which is resulting in the formation of another bubble, this time once again in the US equity markets. Think back over the last decade+ and what we have seen occur in the US financial markets beginning at the height of the stock market bubble that popped in 1999.

From that point on, we have had a real estate market bubble, then a commodity market bubble, then a bond market bubble and now once again we are seeing the formation of a stock market bubble. Think back to that first popping of the equity market bubble in 1999 and to the subsequent popping of each successive bubble that has inevitably followed (as surely as the dusk follows the dawn I might add)as a result of their short-sighted policies - what has been their response? More of the same!

Interest rates were successively slashed to insanely low levels with the effect of PILFERING the retirement earnings of our senior citizens and those who are dependent on fixed income investments. An entire segment of the population has been robbed of a decent rate of interest on their life's savings as a result of these vultures masquerading as economic wise men.

The VICTIMS of the official monetary elites ( and yes I use the term 'victim' because that is PRECISELY what they have become in this game of madness) have been forced into scouring the land looking for a place, a sector, somewhere, anywhere - that they can hope to obtain some sort of decent yield from a SAFE, CONSERVATIVE INVESTMENT with which they can fund their last few years on this earth. Instead, many of them have been forced into joining the marauding band of wild-eyed speculators known as the hedge funds which scour the land raping and pillaging various sectors in succession looking for that precious and rare commodity known as 'Yield'.

And what pray tell have we witnessed our monetary lords and barons doing for the last ten years as far as policy? - why nothing else but managing the fallout from the popping of each successive bubble. Bubbles, which I might add, they themselves have created by employing the same prescriptive medicine, ad infinitum, stupidly looking for a different result each time they experiment upon us. One gets the distinct impression that our financial system is becoming a FRANKENSTEIN ECONOMY - the creation of madmen who cannot see what they have loosed upon the world.

The following chart of the S&P 500 tells the story of yet another bubble forming, once again in the world of equities. Yet this is a bubble being DELIBERATELY BLOWN by the Fed in the hopes that this ever-expanding balloon will engender a corresponding increase in consumer confidence in turn inducing an increase in consumer spending in the process - spending which must occur to lift the economy out of its doldrums.

Once upon a time - a long, long time ago - in an ancient bygone era, during which primitives ruled, men naively believed that a rising stock market was the RESULT of a thriving economy. Nowadays, this is no longer true - instead there is a new religion that has grown to supplant the ancient one. This new religion, complete with its priestcraft of Central Bankers and well connected adherents, has professed a NEW CREED - one designed to drive out any vestiges of the old one. This new creed believes that if the stock market can be MADE TO RISE, the THRIVING ECONOMY will then follow. In other words, cause and effect have been reversed.

What is then required to validate this creed is to induce, cajole, herd, or otherwise force through eliminating alternatives, speculative money flows into the equity markets. Once stocks rise, opinion then turns and with opinion turning, crowd behavior then follows.

With that in mind, observe the latest chart of the S&P 500, a broad representative of the US equity markets. Note how well the speculators are being herded into the equity markets once again seeing that there is no hope of obtaining yield in a near zero interest rate environment - where else is all this money that has been created by the Bank of England, the Bank of Japan, the Fed, the European Central Bank, going to go? Even the PBOC and the Bank of Brazil are getting into the act.

Think back to 1999 and the conditions existing in the economy as far as employment and real estate goes - consider the US budget situation back then and compare that to where it has degraded now. The latest FOMC release informed us that the economy is showing moderate improvement but still faces enough challenges that it requires interest rates to remain near zero for more than a year and a half (late 2014). And yet the S&P 500 is merrily charging higher headed directly in a straight line back to the same level it was prior to the debacles that we have seen first when stocks imploded in 1999 and then again in 2008.

Yes, indeed, stocks have become the only game in town due to the machinations of these plotters and schemers who control monetary policy and attempt to influence crowd behavior. Welcome to the Brave New World of Central Planning.

By the way, does anyone else beside me, see the similarity in the chart patterns of both the Crude Oil market and the S&P 500?

8 comments:

Dan,What you are showing is what I have been saying in my blog -like many more I would add- and in my comments here: We are manipulated by entities who have their own agenda. Fundamentals are not part of the investment world anymore. JP Morgan's whistle blower reported by Jim is another proof of the manipulation. I have said here that investing in the stock market is not a "science" anymore but a casino with the odds favoring the bank. Better play in Las Vegas, your chance of winning is greater.We live in a world where politicians and their allies (oligarchy)are ruling the world for their own benefits and with no respect for their citizens. What you have described is exactly that: US politicians using their power to push the stock market up so consumers feel better and start consuming again so the same politicians are reelected and the empty shell game can continue ad infinitum.

Wow! Somewhat of a different tone from you, but I like it because it is SPOT ON. Hopefully some people will take this opportunity to cash out of the equity rally in the near term and use that fiat to purchase some pm's. I like how the equities are artificially increased, but the metals are artificially suppressed. It's nice to be able to hear the truth instead of hearing propaganda spread. Thanks Dan!

Nailed it my friend! Fraud and manipulation is the coin of the realm these days and have been for a very long time because far too many Americans are willfully ignorant or disengaged to the point of utter insanity.

A quick question regarding TA: Combining the blatant data manipulation and outright fraud on display at TBTF banks with the potential shooting war in Iran that looks more likely, what does that lethal mix do to TA? I am of the opinion that it has to weaken it....but at which points?

If you have benefitted from some of the articles posted here and would like to express your gratitude to Trader Dan for freely sharing some of the market wisdom he has gained over his long trading career, please feel free to Donate.

About Me

Dan Norcini is a professional off-the-floor commodities trader bringing more than 20 years experience in the markets to provide a trader’s insight and commentary on the day’s price action. His editorial contributions and supporting technical analysis charts cover a broad range of tradable entities including the precious metals and foreign exchange markets as well as the broader commodity world. He is a frequent contributor to both Reuters and Dow Jones as a market analyst for the livestock sector and can be on occasion be found as a source in the Wall Street Journal’s commodities section as well as CBS Marketwatch where his views on the gold market can often be found.
He is also an avid beekeeper.

The charts and analysis provided here are not recommended for trading purposes but are instead intended to convey general technical analysis principles. Trade at your own risk. Futures trading in particular is fraught with peril due to extreme market volatility.

All the content of this website http://traderdannorcini.blogspot.com is presented for educational and/or informational and entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it intended to be taken as such. The information and opinions contained at this site have been compiled or arrived at from sources believed reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness.

The commentary and other contents reflect the opinion of Trader Dan Norcini or Dan Norcini alone on the current and future status of the markets, various economies and world events. It is subject to error and change without notice. The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered there.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities or investments or futures contracts. Trader Dan Norcini, or Dan Norcini, accepts no liability whatsoever for any loss arising from the use of this website or its contents. DO NOT EVER purchase or sell any security or investment or derivative such as a futures contract without doing your own and sufficient research.

Trader Dan Norcini or Dan Norcini, is not under any obligation to update or keep current the information contained herein. Trader Dan Norcini or Dan Norcini may, at times have positions in the securities or investments or futures markets referred to at this site, and may make purchases or sales of these securities, investments or futures contracts while this site is live. Those positions may and will more than likely be subject to rapid change due to ever changing market conditions.

Readers therefore are encouraged to conduct their own research and due diligence and/or obtain professional advice before making any investment or trading decision.